Stop Loss

Stop Loss A client’s order to his broker to sell a share if its market price falls to a certain level below the current price. It is a means of protecting one’s profits, or reducing one’s loss, while waiting for the market to recover. For example, one may have bought TISCO at Rs 300. The price rise to Rs 500, and is expected to rise, further. The investor wishes to protect his profit already made while waiting for further rise. He may therefore give a stop loss order to his broker to sell at Rs. 450, so that his entire profit does not melt away.